Trading Glossary

Ask

The lowest price a seller is currently willing to accept. When you buy at market, you usually pay the ask.Slav: "So the ask is the price tag. Got it."

Bid

The highest price a buyer is currently willing to pay. When you sell at market, you usually receive the bid.

Bear market / Bull market

A bear market is a long period of falling prices; a bull market is a long period of rising prices.Slav: "I'd rather meet the bull."

Broker

A company that gives you access to markets and executes your orders. Always check it is authorized by your local financial regulator.

Candlestick

A chart bar showing the open, high, low and close price for a period of time. Green (or hollow) usually means the price closed higher; red means lower.

CFD (Contract for Difference)

A leveraged contract that tracks an asset's price without giving you ownership of the asset. High risk: many retail CFD accounts lose money.Slav: "Same company picture, different package."

Commission

A fee your broker charges per trade. "Commission-free" doesn't mean cost-free: spreads, currency conversion and other fees can still apply.

Diversification

Spreading money across different investments so you don't depend entirely on one. It can reduce risk but can't prevent every loss.

Dividend

A payment a company may make to its shareholders. Never guaranteed: it can be cut, paused or stopped.

Drawdown

How far your account falls from its highest point. Prop firms set strict maximum drawdown rules.Slav: "So it's how deep the hole got."

ETF (Exchange-Traded Fund)

A fund that holds a basket of assets (for example many stocks) and trades on an exchange like a single share.

Exchange

An organized marketplace for listed securities, such as the New York Stock Exchange, Nasdaq, Toronto Stock Exchange or Tokyo Stock Exchange.

FOMO

Fear Of Missing Out: entering a trade because a price is moving fast and you're afraid to miss it, not because it fits your plan.

Forex (FX)

The foreign exchange market, where currencies are traded in pairs like EUR/USD.

Leverage

Trading a larger position than your own money would allow. It multiplies gains and losses.Slav: "So it's a helmet in reverse."

Limit order

An order to buy at or below, or sell at or above, a price you choose. It controls the price but might not be filled.

Liquidity

How easily you can buy or sell something without moving its price much. Low liquidity often means wider spreads.

Long / Short

Going long means profiting if the price rises. Going short means profiting if it falls, which involves different arrangements and risks.

Lot

A standard trade size, used especially in forex. A standard lot is 100,000 units of the base currency; mini and micro lots are smaller.

Margin

Money set aside or borrowed so you can open a leveraged position. Losses can exceed what you expect, and the broker may close your positions (a margin call).

Market order

An order to buy or sell immediately at the best available price. Fast, but the exact price isn't guaranteed.

Pip

A small unit of price movement in forex, usually the fourth decimal place (0.0001) for most pairs.

Position size

How many shares, lots or units you trade. It should come from how much you're willing to lose, not from how excited you feel.

Prop firm

A proprietary trading firm that lets traders use its capital, usually after passing a paid evaluation ("challenge") with strict rules.

Realized / Unrealized gain

An unrealized gain exists only on screen while you hold. It becomes realized when you sell.Slav: "The green number isn't a promise."

Revenge trading

Taking impulsive trades to "win back" a loss. One of the fastest ways to make a loss bigger.

Risk/reward ratio

How much you could lose compared with how much you aim to gain. Risking $50 to aim for $150 is 1:3.

Share (Stock)

A unit of ownership in a company.

Slippage

The difference between the price you expected and the price you actually got, common in fast markets.

Spread

The difference between the bid and the ask. It's a cost you pay on every trade.

Stop loss

An order to close a position if the price reaches a level you choose, to limit losses. In fast markets it may fill at a worse price.

Swing trading

Holding positions for days or weeks to capture a price move.

Day trading

Opening and closing positions within the same trading day.

Take profit

An order to close a position automatically when it reaches a profit target.

Ticker symbol

The short code for a listed security, such as AAPL. Always check the symbol, exchange and currency before buying.

Volatility

How much and how fast a price moves. Higher volatility means bigger swings, in both directions.